TV Exposure Boosts IPOs for 2 Catalogers
Primetime TV exposure helped specialty furniture cataloger Design Within Reach, San Francisco. The cataloger, which has been featured on hit shows such as Bravo's "Queer Eye for the Straight Guy" and TLC's "Trading Spaces," sold 4.1 million shares at $12 a share last week.
The stock was trading at $16.50 by midday June 30 after peaking at $17.39 earlier that day. The company sells modern furniture through its retail stores, catalog and Web site. It was founded five years ago by designer Rob Forbes and had first-quarter sales of $22.5 million, an increase of $6.4 million from last year.
Sal Morreale, an analyst who tracks IPOs at Cantor Fitzgerald, attributed part of the offering's success to its exposure on the two programs.
"It can't hurt if you have a product and you can penetrate that market," he said.
The small number of shares Design Within Reach offered also factored into the IPO's success.
"Four-point-one [million shares of] stock is a very small deal," he said.
Another specialty retailer had a successful IPO last month, as hunting and fishing gear retailer Cabela's sold 7.8 million shares at $20 a share June 25. On June 30, it was trading at $26.80. The company is the second outdoor sports retailer to hit a home run on its first day on the market. One of Cabela's competitors, Gander Mountain, closed 38 percent above its IPO in April.
Like Design Within Reach, Cabela's got its feet wet in cable television. The company brands its products through "Cabela's Outfitter Journal," a magazine and television show airing on the Outdoor Life Network.
Cabela's, Sidney, NE, operates several retail stores, a catalog and a Web site. The company reported a 20 percent revenue increase in its last earnings report for the 13 weeks ended April 3. Net income rose from $3.1 million to $8 million.
Though the television presence may have helped both deals, Morreale said, each company's strong financial footing was equally important.
"Both of those deals were quality deals," he said. "You have to remember that both of these companies had strong balance sheets and market penetration."
Bass Pro Shops, another outdoor retailer with a television presence, is rumored to go public soon, Morreale said. The Springfield, MO, company debuted "Bass Pro Shops Outdoor World Hunting" in 1998. It airs on the Outdoor Channel.
Portfolio value: If $1,000 had been invested in each of the 100 companies in the DM News Portfolio at the start of 2004, or when the stock first closed for newly public companies, the value would be $138,744, up 38.74 percent.